Sime Darby expects better results from Q4 onwards due to diversified base

Sime Darby Group CEO Datuk Jeffri Salim Davidson speaks to reporters in Kuala Lumpur August 30, 2018. — Picture by Miera Zulyana
Sime Darby Group CEO Datuk Jeffri Salim Davidson speaks to reporters in Kuala Lumpur August 30, 2018. — Picture by Miera Zulyana

KUALA LUMPUR, May 21 — Due to its diversified businesses, Sime Darby Bhd is cautiously optimistic that the group will perform well from this quarter onwards supported by the industrial and motors segments in China and Australia.

Group chief executive officer Datuk Jeffri Salim Davidson said the two countries would remain a big part of the company’s business; hence it was hoping that the segments would help to mitigate any adverse economic impact on both the global economy and the Malaysian economy.

“We are in businesses that are not as (badly) affected such as the airline and hotel industries. Yes, our results are down but considering the current situation, it is actually not that bad,” he said during a virtual media briefing on the group’s third-quarter results today.

The group today reported that its net profit for the January-March 2020 quarter fell by nearly half (about 48 per cent) to RM115 million from RM222 million in the same period last year.

“The operations in China were significantly impacted during the quarter while the other countries were also affected in the later part of the quarter as the coronavirus outbreak spread to other countries in the Asia-Pacific,” it said in its filing with Bursa Malaysia.

However, revenue slipped only 1.6 per cent year-on-year to RM8.43 billion.

Sime Darby is involved in four main sectors: industrial (distributor of brands such as Caterpillar), motors (dealer for brands such as BMW, Rolls-Royce, Ford and Hyundai, as well as other activities), logistics (operator of ports in China) and healthcare (operator of hospitals in Malaysia and Indonesia, a nursing college in Malaysia, and a day surgery centre in Hong Kong).

Jeffri said the motor segment rebounded quickly in China after the government lifted the lockdown.

“In China, there is a term called ‘revenge shopping’. After being in lockdown, people have gone out and started to buy cars,” he said, adding that demand for cars and hydraulic excavators there appeared to have rebounded and both the motors and industrial operations had had a relatively strong April (the start of its fourth financial quarter).

He also said that although new sales for the motor industry would be slower, the after-sales business would continue as people would still need to service their vehicles.

Meanwhile, in Australia, where mining is an essential industry, Sime Darby customers have continued to depend on its subsidiary Hastings Deering, which sells, rents and services Caterpillar products, to provide support to ensure that their mining trucks are running smoothly.

However, Jeffri noted that the business in other countries, including Singapore and New Zealand, was a little slower.

Besides planning to divest non-core assets, he said, Sime Darby would continue to cut costs where necessary to weather the current economic challenges, preserve its cash and make sure that it could retain its employees.

“We should be okay even in the worst case,” he added,

At the close today, shares of Sime Darby rose a sen to RM2.02. — Bernama

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